US Treasury Undersecretary for Counterterrorism and Financial Intelligence Brian Nelson said in Austria on Friday that Russia was using sanctions-busting techniques to purchase more than a dozen types of goods, including electronic components, optics, manufacturing equipment, processors, controllers, video cameras, lasers. and signal generators.
Nelson also described “red flags” that financial institutions should watch out for in order to prevent Russian buying. The US Treasury recommends be wary of tenders from companies with no track record, those companies about which there is little or no information on the Internet. The suspicion should also relate to transactions where there is a change of final recipients, especially at the last moment, as well as to companies located in transit countries for the electronics or engineering sector.
Nelson said “sanctions and export controls are having a bigger impact (on the Russian economy) than Putin could have imagined.”
According to Nelson, this is evidenced by several key indicators:
- Last year, Russia experienced the second largest budget deficit in its post-war history, with a large budget deficit in the first half of this year.
- Thanks in part to price caps and sanctions, Russia’s main source of budget revenue – oil and gas – fell more than 40% in January and February 2023 compared to a year ago.
- In December alone, Russia spent more than $35 billion from the National Welfare Fund to cover its deficit.
- The state of Russia’s military-industrial complex and defense supply chains has deteriorated significantly, causing its advanced manufacturing industries to lag behind.
Nelson also said an indicator that sanctions and export controls are working is the activation of Russian intelligence services looking for ways to circumvent sanctions.
According to the US government, Russia has lost more than 9,000 pieces of military equipment on the battlefield and is now struggling to replace them. This is why it is so important to stop the illegal export to Russia of important components for the military industry.
Nelson traveled this week to Italy, Switzerland, Germany and Austria, where he held meetings with government officials and representatives of financial firms to close as many loopholes as possible allowing Russia to circumvent punishments.
Next week, US Under Secretary of State for Terrorist Financing and Financial Crime Elisabeth Rosenberg will travel to Kazakhstan and Kyrgyzstan on a similar mission.
Nelson’s visit comes as Washington attempts to crack down on Russia’s sanctions evasion and ahead of US Under Secretary of State for Terrorist Financing and Financial Crime Elisabeth Rosenberg’s trip to Kazakhstan and Kyrgyzstan next week.
Washington has previously said it is concerned about the evasion of sanctions in Kazakhstan.
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